Options and tax advantages for your college-saving journey
Paying for college (or any future education) can feel overwhelming, especially when it comes to figuring out how to save.
A 529 plan is a simple and flexible way to start saving now, so you can build a plan that grows with your child and your goals.
Whether your child is a newborn, in kindergarten, or getting closer to graduation, starting now can give you more options and peace of mind down the road.
Start early and give your money more time to grow
When it comes to saving for education, time matters more than anything else.
Starting early gives your savings more time to grow, even if you’re only setting aside a small amount each month.
This helps you build a stronger financial foundation before tuition and other expenses come into play.
Let’s look at an example:
If you save $200 a month:
- Start when your child is 1 → about $86,000* by age 18
- Start at age 10 → about $36,000* by age 18
That’s nearly $50,000 more just from starting sooner.
*This example is for illustrative purposes only and assumes a fixed rate of return. Earnings are not guaranteed, and actual results may vary.
The key takeaway? You don’t need to start big. You just need to start.
Even small, consistent contributions can add up over time and give you more options when it matters most.
What is a 529 plan?
A 529 plan is a way to save for education expenses without paying taxes on the growth of your savings.
Here’s how it works:
- You contribute money you’ve already paid taxes on
- You choose how your money is invested based on your goals and timeline
- Your savings can grow tax-free
- And when used for education, qualified withdrawals are also tax-free
What can a 529 plan pay for?
529 plans can be used for more than just college tuition.
Funds may cover:
- College and university tuition
- K-12 private education tuition
- Room and board (within limits)
- Books and supplies including laptops and technology
- Student loan repayment (up to $10,000 lifetime)
Who can contribute to a 529 plan?
Anyone can contribute to a 529 plan, including:
- Parents and guardians
- Grandparents
- Family members
- Friends
It’s a simple way for others to support your child’s future.
What happens with unused 529 earnings?
A 529 plan can still benefit your child, even beyond education.
In some cases, unused funds can be rolled over into a Roth IRA (Individual Retirement Account) to help your child start building retirement savings early.
Here’s what to know:
- Up to $35,000 can be rolled over (lifetime limit)
- The 529 plan account must be open for at least 15 years
- Annual rollover follows the Roth IRA contribution limit
- Your student can only move the total of their annual earnings each year
Example:
- If they earn $5,000 they can roll over up to $5,000
- If they earn $0 they can’t roll anything over that year
Helping your child start their first retirement account gives them a huge leap toward preparing for their retirement and their future.
How 529 plans work in Washington and Idaho
529 plans offer valuable federal tax advantages, but state-level benefits vary. Each state offers a 529 plan.
Washington residents:
Washington doesn’t have a state income tax, so there’s no state tax deduction for 529 plans.
You’ll typically see 2 types of plans:
Lets you prepay future tuition of Washington public colleges. The GET plan is a good option if you know your student plans to enroll at a public university in Washington State.
If your student wants to attend an out of state or private university, you might want to explore the WA 529 Invest plan.
Lets you save for future education expenses by selecting one of 4 investment options:
Idaho residents
Idaho residents may be eligible for state income tax deduction when contributing to an Idaho 529 plan.
What this means for you:
Where you live can impact your tax benefits, but you’re not limited to your state’s plan.
The right choice depends on your goals, timeline, and how you want your money to grow.
It’s never too early to start saving for your child’s future
Starting early gives you:
- More time for your savings to grow
- More flexibility in how you use the funds
- Less financial pressure later
Ready to start planning?
You don’t have to figure this out on your own.
Talk with a Numerica financial expert to explore education savings options and build a plan that works for you.
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Written April 2026
Written by the Numerica Financial Education Team: Helping members grow their money across Spokane, North Idaho, Wenatchee, and the Tri-Cities.
